Long investment strategy. Today, I will examine another Chinese stock in the energy sector and how a natural gas company can also be a great investment for your future.
China Natural Gas (CHNG) obviously produces natural gas. You might be wondering why is natural gas a good sector to invest. There is continual increase need for natural gas because it is used to fuel cars and homes as well as industrial production and commercial purposes. Since China is focused in lowering pollution, energy sources like coal and oil are less attractive while natural gas offers cleaner alternative.
In 2009, natural gas also plunged 70% along with the oil prices. Even with this fall in natural gas price, CHNG was able to maintain profitability and even grew their revenues in 2009. Oil has rebounded well since then but natural gas price is still near the bottom. However, many believes that it will go up this year and as it goes up, CHNG should benefit.
In looking at one year chart, CHNG has been consolidating in a downward direction after a big rally and it has been trading near $10-$11 level. There is a strong support near $8 range. Any Long positions should be matched with a Stop order at $8 to limit further potential loss. There is a potential for CHNG to go up as high as $18 in 2010 so I highly recommend adding this stock to your portfolio.
In the next article, I will be taking a look at another Chinese sector in medicine.
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2 comments:
First of all, gaz prices in the US has nothing to do with CHNG business, as the price of gaz in China (as for the rest of the world) is set by the government.
But most importantly, CHNG is NOT a producer, but rather is a distributor.
As for the rest of your comments, they're probably worth as much as your research.
Thanks for the comment. You are correct in that CHNG is a distributor and not a producer. What is your comment on your prediction on CHNG?
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